Advertising on billboards

Showing the money

Presidential election law leaves holes in the rules of campaign funding

As the first-ever direct presidential election in the Czech Republic draws closer, now just two months away, and the list of candidates is whittled down to a handful of names, those still in the race are increasingly competing against each other to court powerful backers and win over undecided voters. To achieve this, getting themselves noticed is key.

Giant billboards bearing their images line the highways, while posters filled with boasts and promises are popping up on street corners around the country. It is a necessary part of the democratic process, but where does the money come from to bankroll such a costly endeavor?

Advertising on billboards across the country is one of many ways the candidates for the presidency will spend their money to influence votes, and for this they need deep pockets.

Under legislation set out by the Interior Ministry, candidates are permitted to receive and spend up to 40 million Kč ($2.1 million/1.6 million euros) before the first round of voting Jan. 11-12, 2013, and must publish an open balance sheet, from a designated bank account, of all their income and expenditures after officially registering their candidacy.

Although the campaign race has yet to begin in earnest, according to political scientist Anna Matušková, the battle lines are already being drawn.

“The media coverage of this election will be completely different,” Matušková says. “There’s been no debate on how the [future] president should behave. Forty million is not much, but it’s still enough to run a decent campaign.”

Leading the way in the fundraising stakes so far is election favorite, the unaffiliated Jan Fischer. At press time, he had collected more than 13 million Kč in donations. Of the other main contenders, Miloš Zeman, who is second in the opinion polls, can currently boast a smaller war chest of around 1 million Kč, while Přemysl Sobotka (Civic Democratic Party, ODS) and Jiří Dienstbier (Social Democrats, ČSSD) have each been promised a total of 15 million Kč from their respective parties.

In addition, Dienstbier is hoping to augment his funds by looking for small outside donors, seemingly keen to avoid the influence of big business. The TOP 09 candidate, Foreign Affairs Minister Karel Schwarzenberg, has been given 5 million Kč by his party and enjoys the backing of musician David Koller, who has organized a series of concerts in Schwarzenberg’s name.

But with added exposure comes added scrutiny. In a recent interview with The Prague Post, economist Jan Švejnar, based in the United States, said he had chosen not to stand for the presidency because of an “uneven” playing field. Švejnar also called on journalists to delve deeper into the financial sources of candidates.

“The most problematic campaigns are being run by Fischer and Zeman,” says Ondřej Kundra, an investigative reporter for the weekly Respekt magazine. “For example, Fischer is supported by [Czech media magnate] Jaromír Soukup. It’s not good for transparency that he’s co-operating with a media guy.”

That controversial relationship came to a head late last month when former caretaker Prime Minister Fischer paid to fly two journalists – one from the left-leaning daily, Právo, the other from Soukup’s weekly Týden magazine – to the United States for a tour to promote his foreign policy agenda.

Fischer’s campaign team didn’t feel the need to declare the reporters’ trip, which encountered strong criticism from politicians and analysts alike. “I think it was Soukup’s idea to let the journalists go with [Fischer],” Kundra added.

A 9 million Kč donation from serial entrepreneur Tomáš Chrenek has also attracted considerable attention. At the time of the donation in July, Chrenek told business daily E15, “Jan Fischer is the most trustworthy candidate for me. He has proved that he can succeed as head of the Czech Cabinet … He has won the respect of the public and recognition from experts and professionals.”

However, it has emerged that during Fischer’s temporary reign as prime minister, Chrenek’s heavily indebted health insurance company, Agel, benefited from a public merger, even though the law prohibited such deals. This revelation inevitably raises questions over the 61-year-old’s independence.

“It’s absolutely unacceptable for donors to seek any kind of favor in return for their gift, either during my campaign or after my potential election,” Fischer told The Prague Post in response. “This is a matter of principle for me, and all activities of my sponsors as well as myself are and will be under close public observation, making any hidden agreements impossible.”

Zeman, meanwhile, has faced accusations that his campaign is providing a channel for Russian businesses, notably the energy giant Lukoil. Three high-ranking members of Zeman’s Party for Citizens’ Rights (SPOZ) have close ties with the firm, which secured a contract to supply 20 percent of the jet fuel used at Prague’s airport back in 2009.

Among the three is Zeman’s right-hand man, the lobbyist Miroslav Šlouf, who helped broker that deal, and who has reportedly financed SPOZ to the tune of 1 million Kč. But despite the apparent links with Russia, campaign spokeswoman Hana Burianová denies any foreign collusion in the former socialist prime minister’s bid.

“Neither Lukoil nor any of its subsidiaries are financially involved in the campaign of Miloš Zeman,” she said. “The campaign of any candidate should, in our opinion, only be supported by Czech individuals or organizations.”

All of the remaining candidates, with the exception of Vladimír Dlouhý, have opened transparent bank accounts as they attempt to fulfill the Interior Ministry’s regulations. Dlouhý says he will continue to make the names of his biggest donors available on his website, but hasn’t yet decided whether to set up a transparent account.

This serves to highlight inconsistencies in the election law, of which there are “different interpretations,” Dlouhý says. Matušková agrees the regulations, while strict on spending, are complex and unclear.

“The fundamental problem is that this law became valid Oct. 1,” she said. “People are debating if money raised before then should be included in the official accounting process. The law has created a lot of mess, and now candidates are having to find ways of justifying their decisions.”

Another case in point is the wave of advertising featuring Zeman that appeared earlier this year, well before the 68-year-old had obtained the 50,000 signatures required for him to enter the presidential race. Respekt claimed the cost of the ads was in the region of 7 million Kč, although Burianová puts the figure at around half that amount. She says all marketing activity prior to the campaign will be credited as a non-monetary gift from SPOZ – much to Fischer’s consternation.

“Every campaign crown should have a name, and no one should hide behind the anonymity of their party’s treasury,” he said.

“If the candidate accepts money from a political party, that party itself should immediately reveal all of the donors who contributed those funds. Only with transparency and decency do presidential candidates have a chance to build the trust of Czech citizens in politics and public affairs.”

However, campaign funding here pales in significance compared with that of the United States, where a Supreme Court judgement in 2010 – known as the “Citizens United” ruling – allows so-called Super PACs (political action committees) to raise unlimited and undisclosed sums of money, so long as they don’t work directly with the candidates.

Four years ago, incumbent U.S. President Barack Obama spent roughly $750 million dollars to get to the White House. This time around, and with the vote cast Nov. 6, both Obama and his Republican challenger, Mitt Romney, have seen their expenditures soar past the $1 billion dollar mark, thanks in part to the Super PACs. A lot of that has gone to television advertising, which is strictly limited in the Czech Republic.

“It’s all about the TV time,” Matušková says. “Fundraising is also used as a PR tool. If you can raise the money, it shows you’re a capable leader.”

As many as 15 watchdogs have been examining the candidates’ finances in the U.S., including the website Opensecrets.org. These efforts will now be replicated by Transparency International’s Czech branch, focusing on the availability and clarity of campaign accounts.

– Monika Ticháčková contributed to this report.

Money raised thus far

13.3 million Kč
Jan Fischer, Independent

9.0 million Kč
Karel Schwarzenberg, TOP 09

5.4 million Kč
Vladimír Dlouhý, Independent

3.9 million Kč
Jiří Dienstbier, ČSSD

1.1 million Kč
Miloš Zeman, SPOZ

0.7 million Kč
Přemysl Sobotka, ODS

0.4 million Kč
Zuzana Roithová, Christian Democrats

0.2 million Kč
Vladimír Franz, Independent

Undisclosed
Jana Bobošíková, Sovereignty

Figures taken from candidates' transparent bank accounts or campaign websites and relevant as of press time

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